New Jersey and 40 States Hold CAC Accountable After CFPB Permanently Dropped Its Enforcement Action in 2025
TRENTON — Attorney General Jennifer Davenport and the Division of Consumer Affairs announced today that Credit Acceptance Corporation (CAC), one of the nation’s largest auto finance companies, will provide $694 million in cash and debt relief to car buyers who received a CAC auto loan. CAC was facing allegations that it targeted credit-challenged and low-income consumers with offers to help them improve their credit but provided them with expensive car loans that its own systems predicted certain borrowers could not afford and then subjected borrowers to aggressive debt-collection tactics.
In 2023, CAC was sued by the Consumer Financial Protection Bureau (CFPB) and the State of New York over these lending practices, but in 2025, the CFPB permanently dropped its case against CAC. New Jersey and 40 other Attorneys General stepped in, negotiating a settlement for both major financial relief and an obligation for CAC to reform its auto lending practices and implement safeguards that help to shield borrowers from the harmful practices alleged to have contributed to high rates of defaults and repossessions. New Jersey will receive more than $28.5 million of the total settlement, including approximately $2.2 million in restitution and $25.6 million in debt relief for affected New Jersey consumers.
“Access to a car helps families get to work, take their kids to school, and build financial stability–but when car payments become unaffordable, that stability turns into a spiral of debt and financial distress,” said Attorney General Jennifer Davenport. “I am proud of the way New Jersey and our fellow states stepped up to obtain relief for car buyers who suffered devastating consequences as a result of CAC’s conduct.”
“Predatory and deceptive lending practices are especially harmful when they target consumers who can least afford the consequences,” said Christopher Peterson, Acting Director of the Division of Consumer Affairs. “We will continue to investigate lenders that take advantage of financially vulnerable consumers and hold them accountable when they violate the law. No company should be able to profit by trapping consumers in unaffordable debt or charging them for add-ons they did not knowingly purchase.”
The settlement resolves allegations that CAC, which provides car loans to consumers with limited or impaired credit histories, originated loans that the company knew or should have known consumers could not afford. CAC gives a proprietary “score” to each of its loans representing its prediction of the percentage CAC will collect on the loan. The 41 Attorneys General alleged that CAC’s customers could not reasonably afford many of CAC’s low “score” loans, including those where CAC predicted the consumer could not pay back even the loan’s principal. Unsurprisingly, many of those low “score” loans resulted in consumers defaulting and losing their cars to repossession.
The settlement also resolves allegations that CAC encouraged and failed to reasonably prevent unlawful vehicle-service contracts (“VSCs”) and Guaranteed Asset Protection (“GAP”) product “packing” by auto dealers in CAC’s network. The Attorneys General allege that CAC’s dealer compensation methodology and lack of reasonable dealer oversight resulted in dealers aggressively selling VSCs and GAP products in connection with CAC loans when consumers were either unaware they were purchasing these add-on products, or were led to believe the products had to be purchased for the consumer to get financing.
The settlement provides $60 million in nationwide cash restitution, which will be distributed by the Attorneys General to consumers to whom CAC gave particularly risky loans. For consumers with certain risky CAC loans made between November 1, 2015, and November 30, 2025, CAC also will provide $388 million in debt relief to consumers whose cars were repossessed, and $246 million in debt relief to consumers whose cars were not repossessed, allowing those consumers to keep their cars. CAC must also pay an additional $15 million to the Attorneys General.
The settlement’s injunctive terms include the following requirements, designed to reform the company’s lending practices:
Joining Attorney General Davenport in the settlement with CAC are the Attorneys General of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, and Wisconsin joined this settlement. New York is concurrently settling litigation it brought against CAC in the Southern District of New York.
Attorney General Davenport and DCA were represented in this matter by Deputy Attorneys General Sara J. Koste, Monica E. Finke, and Conor C. Vance, under the supervision of Consumer Fraud Prosecution Section Chief Jesse J. Sierant and Assistant Attorney General Janine N. Matton.
Consumers with questions about the Attorney General’s settlement with Credit Acceptance Corporation can call 1-800-634-1506. Customers eligible for debt relief will be notified by CAC. Consumers eligible for restitution will be notified by a claims administrator.
